Delhi High Court: A petition was filed by the Madhya Pradesh State Electricity Board (MPSEB) seeking relief against the provisional power allocation made by the Union of India under the Madhya Pradesh Reorganization Act, 2000, which they claimed unfairly disadvantaged Madhya Pradesh by allocating an insufficient share of power from the Central and State sectors and in favor of Chhattisgarh. Prateek Jalan, J., held that the provisional allocation was in accordance with the legal framework established under the Act, and while Madhya Pradesh’s concerns were acknowledged, the allocation was deemed fair and proportionate based on the criteria applied, with no further relief being granted.
The case revolves around a legal dispute regarding the allocation of power between the states of Madhya Pradesh (MP) and Chhattisgarh, following the reorganization of the erstwhile state of Madhya Pradesh. The allocation was made under the Madhya Pradesh Reorganization Act, 2000. Madhya Pradesh Power Generating Company (MPSEB) and Chhattisgarh State Electricity Board (CSEB) were the respective successor electricity boards. The primary question was whether the Union of India (UOI) correctly allocated central sector and state sector power between the two states, and if the method used, including the reliance on power consumption ratios, was fair and lawful.
Upon the division of the state of Madhya Pradesh, power generation facilities were also split between Madhya Pradesh and Chhattisgarh. The geographical principle was applied for allocation, giving MP a 68.1% share of the power from state-sector generating units, while Chhattisgarh received 31.9%. However, the states consumed electricity in disproportionate ratios: 77.03% by Madhya Pradesh and 22.97% by Chhattisgarh. The allocation of power from the central sector was initially done on a provisional basis, with MP receiving a larger share to compensate for its higher consumption needs. This provisional allocation was based on a consumption ratio of 79:21. However, this ratio was temporary, pending further review once more data on consumption was available.
As tensions grew over the perceived imbalance, Chhattisgarh protested its reduced allocation. Madhya Pradesh, in contrast, maintained that its allocation was justified by its larger consumption needs. The UOI, after reviewing the situation and receiving reports from the Central Electricity Authority (CEA), issued a final allocation order on 03-11-2004. This order increased Chhattisgarh’s share, but MP still received the lion’s share of the allocation.
The dispute led to two writ petitions, first, Madhya Pradesh filed a petition challenging the initial provisional allocation made in January 2001. Second, Chhattisgarh filed another petition, seeking more equitable distribution of power, particularly challenging the final allocation order dated 03-11-2004. Both states claimed they were disadvantaged by the allocation methodology adopted by the UOI.
Madhya Pradesh contended that the UOI’s decision to reallocate power to Chhattisgarh based on consumption needs was arbitrary. It argued that the State’s higher energy demand necessitated a larger share of power from both the state and central sectors. Madhya Pradesh’s counsel highlighted that the provisional allocation method favored Chhattisgarh unjustifiably.
Chhattisgarh, on the other hand, argued that it had been historically under-allocated power despite its rapid industrial growth. It pointed out that even after the final allocation, its share did not meet its growing energy consumption needs. The State contended that the UOI’s use of the power consumption ratio, while a relevant metric, was still inequitable when compared with other factors such as potential for growth and industrial requirements.
The UOI defended its decision by stating that it had adhered to the statutory scheme and that the power consumption ratio was a rational and justifiable basis for allocation. The Gadgil Formula, often used for resource allocation, was not mandatory under the law, and alternative methodologies were permissible.
The Court emphasized that its role in judicial review was limited to examining the decision-making process rather than the merits of the decision itself. It noted that administrative authorities have discretion to determine relevant factors in resource allocation, provided they avoid arbitrariness and irrelevance. If the Union of India considered pertinent factors like the consumption ratio, the Court could not intervene or impose its own assessment.
The Court further observed that the UOI was not bound by any statutory formula for allocation, such as the Gadgil Formula. The flexibility granted by law allowed the UOI to employ a different approach if deemed appropriate, particularly given the unique circumstances of the case. The power consumption ratio, recognized by the Supreme Court in earlier cases, was a valid factor for the allocation of energy resources between the two states.
Additionally, the Court rejected Madhya Pradesh’s argument that the allocation order unfairly deducted state-sector power from its share. The Court pointed to Section 75(2) of the Madhya Pradesh Reorganization Act, 2000, which instructs the UOI to account for potential disadvantages faced by either state. The reduction in MP’s allocation was justified, considering that it already had access to more power from state-sector plants.
The Court dismissed Chhattisgarh’s petition upholding the final allocation order dated 03-11-2004. It concluded that the UOI had acted within its discretion and applied a rational methodology. The use of the power consumption ratio was reasonable, and the UOI had lawfully adjusted the allocation to account for the availability of state-sector power.
With regard to Madhya Pradesh’s petition, the Court noted that the provisional allocation order challenged by MP had been superseded by the final order of 03-11-2004. Since this final order had now been upheld, MP’s petition was rendered infructuous, and the Court disposed of it accordingly.
Thus, the Court found no illegality or arbitrariness in the UOI’s power allocation and dismissed both petitions, with no order as to costs.
[Madhya Pradesh State Electricity Board v. Union of India, 2024 SCC OnLine Del 7350, decided on 21-10-2024]
Advocates who appeared in this case:
Mr. Raj Kumar Mehta, Ms. Himanshi Andley, Advocates for CSE.
Mr. Sakesh Kumar, Ms. Gitanjali N. Sharma, Advocates for MPSEB.
Mr. Kirtiman Singh, CGSC with Mr. Varun Rajawat,
Mr. Waize Ali Noor, Mr. Ranjeev Khatana, Advocates for UoI.
Ms. Swati Surbhi & Mr. Abhishek Pandey, Advocates for the State of Chhattisgarh in Item 1.
